a) Issued and effective for 2022 Annual Improvements to IFRS Standards 2018–2020 provides a streamlined process for dealing efficiently with a collection of amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases and IAS 41 Agriculture. The amendments do not impact the current practice of the Group. Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use prohibit the deduction of proceeds from selling items produced before an item of property, plant and equipment (PP&E) is available for use from the cost of that PP&E. The amendments do not impact the current practice of the Group. Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. The amendments do not impact the current practice of the Group. b) Issued and effective for 2023 and after Amendments to IAS 1: Classification of Liabilities as Current or Non-current affect only the presentation of liabilities in the statement of financial position by clarifying that the classification (a) should be based on rights that are in existence at the end of the reporting period, and (b) is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability. The amendments do not impact the current practice of the Group. Amendments to IAS 1: Disclosure of Accounting Policies require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments do not impact the current practice of the Group. IFRS 17 Insurance Contracts establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts. The standard has no impact for the Group. Amendments to IAS 8: Definition of Accounting Estimates help entities to distinguish between accounting policies and accounting estimates and replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error. The amendments do not impact the current practice of the Group. Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction clarify that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments do not impact the current practice of the Group. 2.2 Consolidation The subsidiaries that are consolidated are those companies controlled, directly or indirectly, by Givaudan SA. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether or not it controls an investee if there are indications of a change in facts and circumstances. Companies acquired during the year are consolidated from the date on which operating control is transferred to the Group, and subsidiaries to be divested are included up to the date on which control passes to the acquirer. The acquisition method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets acquired, shares issued and liabilities undertaken or assumed at the date of acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date. Acquisition related costs are expensed as incurred. The excess of the cost of acquisition over the fair value of the Group’s share of net assets of the subsidiary acquired is recognised as goodwill. Where necessary, changes are made to the accounting policies of subsidiaries to bring and ensure consistency with the policies adopted by the Group. Assets and liabilities, equity, income, expenses and cash flows resulting from inter-company transactions are eliminated in full on consolidation. 47 Givaudan — 2021 Governance, Compensation and Financial Report Governance Report Compensation Report Consolidated Financial Report Statutory Financial Report Appendix Notes to the consolidated financial statements